Zehr: For individual and community, workforce training pays off

Dan Zehr

Saturday

Oct 18, 2014 at 12:01 AMSep 25, 2018 at 10:41 AM

Michele Monreal first heard about Capital IDEA’s free workforce training program through her church, but she had her doubts.

At the time, Monreal’s life looked much like her mother’s, and much like those of the friends and family around her. She was a 19-year old single mother who’d dropped out of high school. She worked in child care for about $10 an hour and needed public assistance to make ends meet.

So despite her skepticism of anything that promised a better life in exchange for little other than hard work and commitment, she signed up with Capital IDEA’s surgical tech program in 1999.

And so began 2½ years of clearing the dinner table so she and her son, Gabriel Perez, could do their homework there. Part way through the program, she passed a critical clinical readiness exam just three days after her daughter, Savannah Perez, was born.

These days, Monreal works for St. David’s North Austin Medical Center, making roughly triple what she did before completing the Capital IDEA program in 2001.

"My mother dropped out in 11th grade," she said. "I dropped out around the same time and was pregnant at 19. … I would not have been able to break that cycle alone."

Yet those sorts of results don’t come cheap, and taxpayers foot much of the bill. While the costs vary at the dozen or so workforce training programs supported by the Capital Area Workforce Board, they collectively rely on federal, state and local taxpayer dollars to deliver their services.

Yet for all the avenues taxpayer dollars can take, few provide the returns that quality workforce training programs can deliver.

Capital IDEA spends almost $15,000 on average to help a working poor adult through its programs and into a job, said executive director Steve Jackobs. It’s pricier than most programs, in part because it provides an array of support services so the snares of everyday life don’t keep students from progressing.

Yet Capital IDEA more than recoups the public investment by targeting jobs with benefits, a long-term career path and wages of at least $15.90 per hour out of the gate. According to a recent study by the University of Texas Ray Marshall Center for the Study of Human Resources, each taxpayer dollar that goes into the program will return $5.01 in tax receipts and avoided welfare costs over the next 20 years.

Jackobs and his colleagues have targeted roughly three dozen careers, and the cost of the training programs can vary widely. On average, the cost for each student runs around $4,200 annually.

It takes the average student around 3½ years to complete the program, but Jackobs, Austin Community College and other partners in the new Career Expressway program hope to shave some time off that.

On an individual basis, that $15,000 investment to take a working poor adult into a better-paid career doesn’t sound unreasonable, especially given the return on such training programs. A few back-of-the-napkin calculations suggest it might be equally reasonable in long-term, community-wide terms as well.

The core set of 35 occupations Capital IDEA targets are projected to add almost 15,000 new jobs from 2013 to 2023, according to EMSI, a firm that specializes in economic and workforce data analysis. If Capital IDEA could cut the average completion time to 2½ years, it would cost $157 million to fill all those positions with the program’s graduates.

Of course, those workers will come from a range of backgrounds and programs. So consider it another way: Roughly 5 percent of middle-class workers head back to school to complete or advance their education. If you had that ratio of Austin’s 250,000 working poor adults enter training programs over the next three years, you’d have about 12,500 people entering each year.

If all those people went to Capital IDEA, it would cost about $52.5 million a year to train them.

"When you’re in the trenches and you’re talking to someone about using used books, $50 million is an impossible number," Jackobs said. "But when you kind of step back from it and say, ‘OK, we can replicate this experience and here’s what would … meet this part of the solution to the problem’" it doesn’t sound unattainable.

With a current operating budget of $4.2 million, Jackobs has no plans to target that many people. But he enjoys thinking about it.

"There’s a 500 percent return" on Capital IDEA’s programs, he said, "so your $50 million is returning a quarter-billion dollars."

Making residents employable

Most Travis County workforce training programs get much of their funding from the Capital Area Workforce Board, which in turn gets 96 percent of its funding from the federal government.

Alan Miller, director of the workforce board, would like to see a more sustainable and steady source of funding, rather than depending on the whims of Washington for many of its revenue streams. He and county officials have discussed the idea of using corporate incentives deals as a way to derive more local funding.

"If the company is hiring only highly skilled technical staff, they may or may not be available locally," Miller said. "In this type of case, why not have them set aside a small percentage of the incentive into a ‘community’ workforce fund?"

All told, Austin has paid or pledged almost $115 million in corporate tax incentives. Add in Travis County’s contributions, and that figure doesn’t look all that different from the $157 million it would take for Capital IDEA to fill its target-job projections.

If you can’t employ more of our residents, Miller and others ask, why not help make more of our residents employable?

No one suggested the city should simply channel the full value of incentives rebates into workforce training programs. Economic development efforts need to consider both supply and demand, supporting job creation and workforce training alike.

However, retaining flexibility in those programs is vital.

"One of the ideas of doing economic development by contract is you can sit down with each other and articulate the goals and desires you want," said Jon Hockenyos, principal at TXP Inc., an Austin economic consulting firm. "You can say, ‘This is what we’re looking for as a city or county, and you can work that out."

Local officials did that with Samsung, for example, when the company agreed to channel a significant portion of its incentives back into education and training.

However, Dave Porter, senior vice president for economic development at the Greater Austin Chamber of Commerce, says the city’s current incentives framework makes those sorts of deals difficult to strike.

The current framework is geared to attract companies that employ higher-paying jobs for workers with college degrees, Porter said. Despite the bonuses and waivers for hiring locally or contributing to training programs, prevailing wage requirements drive away many of the types of companies that would employ workforce training graduates.

"There’s a huge disconnect between the city’s economic development policy and the workforce training programs that are out there," Porter said.

If providing more middle-class jobs for the working poor is an Austin priority, he said, city leaders need not open the floodgates or reduce expectations. Simply building more flexibility into the process could attract the types of employers who provide those jobs.

"At the end of the day," Miller said, "we all want our economy to grow and provide job opportunities—and we’d like to see as much local talent as possible fill those new jobs."

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